A vote for changes in the Cyprus social insurance (Amending) (No. 2 Law) of 2017 and the Social Insurance (Contributions) Amending Regulations has recently been made, now awaiting an enforcement date by the Council of Ministers, and announcement in the Official Gazette of the Republic of Cyprus.
The Law and Regulations heavily penalizes undeclared work and differentiation in the process of employment commencement.
The main amendments to the Law include:
1. Employers sanctions
When undeclared employment is identified by an inspector, the employer will be fined €500 for each employee for the month of the infringement, which will further incur and additional €500 for each calendar month or any part of the calendar month of employment, prior to the month of the violation. There will be no fines imposed preceding the date of 2 June, 2017, of the amending Law.
Remuneration that has been undeclared or under estimated will also incur an administrative fine for the employer of €500 for each employee, (whether employed legal or not), for the committed offense, however no fines are imposed for, prior to the Law enforcement date.
The maximum fine imposed on the employer who employs up to 10 insured persons may not exceed €10,000 at any one time.
Prior to the administrative fine been levied, the inspectors will inform the employer of his findings and fine to be charged and allow him a 5 day period to provide counterproof that the infringement has not been made. Should this deadline be surpassed with no appeal then the inspector will proceed to issue a Fee Imposition Act.
Should the allocated fee be met within 30 days, a reduction of 30% is given, however if payment is made later than the 30 day payment allocation period, the fine is increased by 50% for each additional day of delay, from the payment deadline.
The above mentioned fines are not applicable to employment of household workers or persons providing medical care services to members of the family.
2. Minimum employment period and salary assumption
Once an offense has been committed an assumption is made that the employee of the pertaining offense, has been employed for a period of six months prior to the offense identification date, with an assumed salary of one and half times the basic insured earnings, unless can be proved and substantiated otherwise by employer.
Where there is proof of a longer employment period and higher earnings than those assumed above, the actual remuneration and employment term shall be taken into account.
3. The right to temporary suspension of the employer
In the event that the employer receives an administrative fine twice within a two year period, the case is referred on to the Social Insurance Committee (composed of the Director of Social Insurance, acting as President, and two additional Officers from the Minister of Labour, Welfare and Social Insurance. The Committee with approval of the Minister shall have the power to temporarily suspend the employer, and its divisions, for a maximum period of 48 hours.
4. Right of Appeal
Should a person not be satisfied by the suspension notification, they have the right to appeal, within 15 days from the date of notification, by filing an appeal to the Protest Committee, including the superiors of the inspector as well as the Minister of Labour, Welfare and Social Security and two Ministry Officers; substantiating the reasons for the appeal and filing supporting evidence of funds and documentation.
The appeal however does not automatically invalidate the decision taken, it must be assessed by the Appeals Committee and a decision must be made within a reasonable time frame, informing the person who filed the complaint accordingly.
In assessment of the appeal the Protest Committee has a right to instruct a Ministry of Labour Officer, and other official persons to examine the issues raised, after evaluating the report provided. The Complaints Commission has the final right to:
- Amend the decision;
- Effect a new decision overriding the first;
- Reject the decision in part or in totality, and validate it accordingly;
- Endorse the objection in totality or in part, and cancel the decision accordingly;Refer the case on to the Director, further instructed to proceed with a specific actions.
5. Transitional provisions
Employers have the opportunity and time during this transitional period (from the date of entry into force of the amendment (2 June 2017), for a period of 3 months till (2 September 2017), to take the relevant action and initiate the necessary declaration of undeclared employees, as well as payment of any overdue contributions, to avoid imposition of any Administrative fines.
The application for registration is submitted not later than 1 day before the day the applicant is expected to become an employer.
Employees must within a minimum of one day prior to hiring, inform their employer of his / her identity number and social insurance number, or in the event of them not having one, must complete and deliver the relevant application for registration, as issued by the employer.
The Employer must submit the employee's application to the nearest District Social Insurances Office within a 7 day period, from the recruitment date of the employee.
Albeit the employer must notify the District Social Insurance Office of the recruitment of an employee, through filing and submission of a declaration, no later than 1 day prior to the employee’s recruitment date. This statement must be done electronically.
Regulation 4A has been abolished, therefore the issuance of the attestation of employment triptych has been abolished.
The employer has a responsibility to keep a log or recruitment register, where the following data of all new recruits is logged by order of recruitment date:
- date of recruitment
- date of commencement of employment
- Surname of new recruit
- serial number of his/her recruitment
The above mentioned regulations will be enforced as determined by the Council of Ministers and published in the Official Gazette of the Republic accordingly in due course.